Liberals for social democracy

Howard’s conversion to tax-and-spend social democracy has led to some interesting responses on the right of the Australian political spectrum. I have discerned three main responses.

* See no evil, hear no evil, speak no evil.

This has been the dominant response of the partisan cheer squad represented by commentators like Michael Baume and lobby groups like the Institute of Public Affairs Faced with policies they can’t possibly endorse they maintain a discreet silence and focus on safe grounds for supporting the government, like “experience” . This was the theme of Baume’s latest piece in the Fin, and of the IPA, who wheeled out ex-Labor minister Gary Johns to say

I think Australia has got itself a future prime minister in Latham but I don’t think people will accept him now.

“I think John Howard is a steady hand at the till (sic). I don’t think the economic conditions are such that people will want to switch horses.”

Of course, if you buy this kind of argument we would never have a change of government.

* Hold your nose and pull the lever.

This has been the second-most common response, represented by people like Alan Wood, who, after deploring both parties, manages to find a bunch of reasons for preferring the government.

* A plague on both your houses

Only a minority of those on the right have been willing to condemn the government in the same terms as they have always attacked similar proposals from Labor. One example is a letter by Greg Lindsay and Peter Saunders of the CIS published in The Australian on 29 September.

The big problem for those with this viewpoint is that they have “nowhere else to go”. A few people, like John Humphreys may put the government last. This would be the logical response (if they lose this time, the Liberals might revert to free-market policies, whereas if they win they will persist with social democracy) but I can’t see many people advocating it.

26 thoughts on “Liberals for social democracy

  1. I’ve been advocating it. And of course, I’ve been advocating the free-market alternatives (such as the and Tom Vogelgesang, aka c8to).

    My one disagreement with you Q is that the coalition shift to social democracy has been visible for a while now. It is just that this election has made it increasingly harder for people to just hear what they want to hear (this applies equally for Howard supporters and detractors).

  2. John (H.),

    No criticism of c8to, but he’s hardly going to form the next government, is he? Right-wingers in favour of fiscal restraint and freer markets should be more active in promoting the ALP.

    Howard has burnt through the last shred of economic credibility with this campaign. The budget was bad enough, but this man has shown himself to be the LEAST trustworthy when it comes to fiscal policy.

    The Liberal party needs to shed the dead wood (i.e. Howard and other big-government tin-men) at the top and return to its liberal roots. A spell in opposition should do the trick. I fear that three more years of Howard will only further consolidate the gains of the illiberal neanderthal wing of the party. You think Howard is bad? Imagine the Mad Monk as PM.

  3. I joined (or rather rejoined) the ALP immediately after Latham became leader. Despite my substantial reservations about some of his other policies I remain a member and advocate a vote for the ALP precisely for the reason Quiggin cites (i.e. don’t encourage Howard conservatism in the Liberal party)

  4. John

    I think you are drawing a very long bow to infer we have ‘always attacked Labor’. You must be thinking about someone else.

    Greg Lindsay

  5. Greg,

    John appears to be saying (perhaps inelegantly) that reasons why you have historically attacked Labor (whether that be frequent/infrequent, always/sometimes) are the same reasons why you are now attacking Howard.

    There doesn’t seem to be any suggestion that you do, in fact, ALWAYS, attack Labor.

  6. Hahaha before I read the rest of the post I thought you were saying the 3 main responses were:
    1.See no evil
    2.Hear no evil
    3.Speak no evil

  7. I phoned liam on 720 about this time last year,after latham’s seizure of the leadership.
    I had had a stoush with latham a few years ago over east timor,and let people know that latham had rung ne on the mobile one saturday morning and told me to get fucked.
    However, I said a year ago that he was full of ideas and if only a couple out of a hundred was any good,that would be an improvement on ratty.
    And also that if one had read his books,one would know that he is actually to the right of howard.

    Pr Q’s characterisation of Mr Howard as a born again Social Democrat (S-D) is seriously misleading. It would be far more accurate to put JWH into the category of Liberal Nationalist (L-N) of the post-war period. This type includes de Gaulle, de Gasperi, Adenauer and the old Menzies-McKewan Coalition. L-N goes back to Bismarks socialist economic & nationalist cultural policies which competed with the international socialism of the German S-Ds.
    L-Ns have an in principle committment to private enterprise in most industrial, commercial and financial undertakings. They also believe that private enterprise should play some role in the provision of in human capital developing community services eg medication, education, innovation. L-N also tend to support nation-based small businesses.
    L-Ns are in principle accommodating of universal state financing and guarantees in community services. L-Ns also support state ownership of public utilities and infrastructure.
    S-Ds tend to believe that the state should own, finance and run all community service providers, public utilities and infrastructures. They have a well-placed mistrust of private enterprise in finance.
    Liberal Individualists (L-I), by contrast, believe private enterprise should own, finance and run everything except the Army, Police and Law Courts.
    S-Ds and L-Is have an ambivalent relationship to the Nation State. S-Ds tend to defer to the International State ie UN authorities NGOs etc. L-Is tend to defer to International Companis IBM, MS Etc.
    The anti-national attitudes of some S-Ds and L-Is tend to put them at odds with the nationalist cultural sympathies of mainstream citizens. Hence any cultural policy that has broad support of the majority over a minority is now automatically denounced as an illegitmate form of “wedge politics”.
    L-Ns, by contrast, have a nationalist cultural sympathy which is popular with the (religious-, regionalist-, regent-sympathising) masses.
    For a long while JWH flirted with L-I economic rationalism. But JWH is too committed to small business to be a fully-fledged economic rationalist. His Eco-Rat ideologies should be regarded as an adult indiscretion.
    JWH has always a national populist in cultural matters. It should also be remembered that JWH regards AUS as part of the broader ANGLO-AMERICAN nation from which we were spawned and get our cultural cues.
    The L-N profile fits JWH to a T. His embrace of the L-N Menzies political geneaology, right down to the real estate boom, should be regarded as return to true form.

  9. Jack,

    I fear your grasp of history and ideology is a good deal more sophisticated than the Rodent’s. JWH is a small-time, anti-intellectual suburban solicitor with little vision and less integrity. He has demonstrated no enduring values other than naked ambition and a tragic dedication to cricket.

    He does, however, have exceptional political skills and a good ear for the popular mood. Couple this to his opportunism and the complacency of a reform-fatigued Australia, and you explain the guy’s electoral success in the 1990s.

    He is not liberal in either the economic or cultural sense. His instincts are usually conservative/reactionary and authoritarian. His nationalism is of the superficial flag-waving variety, not a true amor patriae. His treasured position as GWB’s catamite proves his disregard for Australian interests.

    In 20 years’ time we will look back at the Howard era as a period of wasted opportunities.

  10. Meanwhile, even the Canberra Times (Editorial, Oct. 4) has discovered how strange it is to be having a Federal election without any mention of the war in Iraq or the Free Trade Agreement with the US. Bless its little cotton socks! When the old CT works it out, one is really left wondering how the intellectual giants of the rest of the world have managed to miss such an important point. Could it be an emerging Consensus of Cringe?

  11. I believe that it is premature to say that John Howard has abandoned economic rationalism.

    If the Coalition wins on Saturday (very likely) and also takes control of the Senate (less likely, but quite possible) it is almost certain that they will complete the privatisation of Telstra, the only serious unfinished business on Howard’s economic rationalist agenda.

  12. I agree that Telstra is still on the agenda, but only because of bloody-mindedness. If they hadn’t started already, they wouldn’t be pushing privatisation now. And they have no real idea what to do as far as regulation is concerned once Telstra is fully privatised.

    Australia Post is the key indicator here. It was generally seen, in the early 90s, as the next cab off the rank after Telstra. No one even mentions the idea now.

  13. John – it may be a semantic difference only, but I don’t agree that there has been any “conversion” or (from an earlier entry) “fundamental change of view” by Howard. He has always been an opponent of liberalisation of markets and economic reform. When Treasurer under Fraser he was reportedly one of that government’s strongest opponents of change, and as Prime Minister he has likewise only ever been a reluctant reformer. Maybe his public statements are different – they have a very different tone in this election – but the underlying conservatism of Howard is the same.

    I’d argue that in his first term he was much weaker within the Liberal party – and the reforming wing was thus allowed some leeway. Although Howard now claims credit for introducing the GST, it was really Costello’s effort that brought it in. If the GST implementation had not gone as well as it did, Howard would undoubtedly have left Costello to carry the can. Look at the way he let John Fahey carry all the opprobium for the government decision to outsource government IT (note government, not Fahey, decision – but when it went wrong it was all John Fahey’s fault). The government has privatised half of Telstra and is therefore on course to privatise the remainder; but it’s not something Howard would ever have advocated on his own.

    With two successive election wins behind him Howard is now in a much stronger postion – he no longer needs to throw any bones to the reformers. His natural conservatism shows through. That means advocacy for the traditional institutions of the State, no more privatisation, and very old fashioned pork barrelling.

    May I also take this opportunity to disagree with Fyodor about Howard having exceptional political skills. He has won elections by exploiting the fundamental emotions of fear and greed to an extent not previously seen in Australian politics. He has done things to win elections that no previous PM would have contemplated, because they were just too unscrupulous. IMO, that is not evidence of skills (if being crude and unscrupulous to cement your position were evidence of skill, then people like Stalin would have to be classed as among the most skillful politicians).

    Despite not being in agreement with all, congrats. again to John and to commenters for one of the most interesting weblogs around.

  14. Stephen,

    Stalin WAS a skillful politician, as is the Rodent, IMO. He played the Australian voting public – particularly the loony right – exceptionally well, to his own ends. That takes political understanding and skill. It doesn’t mean I approve of his tactics.

    I agree with your other comments.

  15. Fyodor at October 6, 2004 12:18 PM includes:

    [Howard]played the Australian voting public – particularly the loony right – exceptionally well, to his own ends.

    There is a sense in which Fyodor is right. Howard used the racist politics of the Hansonite “loopy right” to win office. But Howard wound up destroying the Hansonite insulationist-nativist Right, both electorally and organisationally.
    Howard is explicitly opposed to racist policies, both in princple and in practice.
    Similarly Howards overt militarism is mostly nominal than real. Afghan-attack and Iraq-attack was the the waging of war as foreign politics by other means. The use of the ADF for stabilisation of regional hotspots (eg Timor) is more like the real thing, but these efforts have been quietly slipped into a memory hole by Political and Cultural Elites.
    Modern Leftists prefer a moralistic, rather than realistic, view of political History.

  16. Jack,

    The horrific debacle in Iraq looms large over any good works accomplished in East Timor.

    Howard was not conducting “foreign politics by other means” in “waging war” in Iraq. He was paying feudal obeisance to his liege, Dubya. It’s a pity we had to go along with him to satisfy his misguided catamitic urges.

    Invading Iraq was a mistake for Australia. Any true devotee of realpolitik would have recognised that there was no compelling national interest for Australia to involve itself in the conflict. Once again, you’re apologising for a foreign policy idiot.

  17. The case for privitising Australia Post is stronger than the case for privitising Telstra. And I agree that the Liberals will not advocate privitising Aust Post… at least until they’ve taken a cold shower. Out with the bastards.

  18. John H, The case for privatising Australia Post since reasonably weak to me. There are big economies of scale in sorting and collecting mail and what must be enormous economies of scale in distributing it. Do you really want two posties servicing each street?

    Given the community service obligation to provide a letter service everywhere at uniform rate, the obvious effect of introducing competition would be that a very few companies might compete by cherry-picking major commercial mail routes such as Sydney-Melbourne.

    It can reasonably be argued Australia Post is a natural monopoly. I also think its productivity has improved in recent years through improved work practices leading to lower staffing.

  19. these threads take some strange twists…

    Unlike Harry, I suggest that much of the activity of Australia Post is not a natural monopoly – and we can see that it in fact has been exposed to competition for some years now. One of the success stories of market reforms in the 1980s was the gradual dismantling of Post’s monopoly over postal services: starting with large parcels, where others were allowed to compete, moving on to small parcels and document delivery – where there are now a variety of alternatives to Post. In effect only the basic letter service remains the monopoly element. This is tightly regulated in relation to price, and Post has been under pressure to find efficiencies elsewhere. I am not even sure the basic letter service is a natural monopoly – the economies of scale do taper off (see the experience of mega mail exchanges). In addition, the uniform rate may not be a CSO but simply a consequence of the structure of the business and the market – the transactions costs involved in setting differential rates in different areas may be so large that uniform rates are a sensible business decision, not something needing to be set by regulation (that said, I’d not be keen to test this argument experimentally, I like the uniform rate).

    The other thing that has happened – highly desirable – has been that government has allowed Post to branch out in to providing a range of other services (payment services at post offices, retailing, and so on – Post shops are now multifacted).

    Although I would not privatise either, in terms of the natural monopoly argument there’s thus a much better case for privatising Post than Telstra, where the telephone line service has clear and obvious natural monopoly characteristics. Shows how poorly thought through the latter privatisation really is.

  20. Stephen, Are not automated sorting systems based on automatic recognition of postcode very expensive and cost efficient only at very large mail volumes? Collecting mail and redistributing seems to be subject to big economies from operating over a single network — partly from economies of pickup or depositing mail but also through economies of transport.

    Privatising the retail side of Australia Post’s operations, courier and specialised parcel services seems to me a good idea.

    Maybe similar arguments do apply to much of Telstra.

  21. A natural monopoly eh? Name one natural monopoly that has lasted more than 30 years without government ownership or support.

    Sure, economies of scale exist. Just like with airline companies and thousands of other industires out in the private sector.

    As for whether I would want two service providers. Sure. Just like I want there to be more than one telecommuncation provider and more than one hairdresser. All very wasteful, evil competition and duplication… but history suggests that that crazy old private sector competition and flexible price mechanism has a few things going for it.

  22. Stock exchanges fit the bill pretty well, John. For obvious reasons, governments have tended not to nationalise them, and in most cases there are no formal restrictions on entry. Nonetheless, the history has been one of local natural monopolies merging to a larger scale over time, as in Australia. The ASX is only 17 years old, but I’d be happy to bet that it will still be there in 13 years time, unless it has merged with something even bigger.

    Almost the only case of new entry to the market for stock exchange services was nasdaq in 1971.

    More significantly, there are lot of duopolies that would be monopolies if it weren’t for competition and antitrust policy. If Qantas were legally allowed to buy out Virgin and buy up the airports, and to charge whatever it liked, it would certainly do so. Of course, there would still be competition from rail and road.

  23. John H, There are agency issues that limit the ability of any organisation to operate efficiently as they get bigger. My point was that there seem likely to be economies of scale in collecting, sorting and distributing mail. In itself, this suggests a weak case for privatising AP.

  24. I’m sceptical about your claim on Howard, John. Big government does not equal social democracy. To me, the two defining characteristics of social democracy are a concern for distributive justice and a long term project for equality of opportunity through equalising life chances by whittling away the effects of intergenerational reproduction of inequality (through inherited wealth, cultural capital etc). Central to both is universalism in public services and a distaste for private provision of public goods. Take the traditional attitude of the British government to private education for instance, and the genuine concern that has existed in British Labour at times over the reproduction of privilege through elite education (British Labour being a far more intellectual and ideological party than the ALP historically, I think it can be reasonably argued – even Blair finds it necessary to seek a genuinely erudite underpinning for his ‘project’). The other defining characteristic of social democracy is a skepticism towards markets as an allocator – and a willingness to intervene in product markets as well as labour markets (as in the policies of German and Swedish governments to promote the concentration of industry and drive small businesses paying low wages out of the market in favour of efficient firms competing on quality and paying high wages).

    Conservatism has traditionally stood for a strong (and perforce big) state. The neo-liberal turn is really a shift more in the encouragement of individual selfishness and a reversal of historic trends towards redistribution in the opposite direction – to those who are already advantaged in the game of life. Thus, for me, Howard is no social democrat. Neo-liberalism was always much more rhetoric than reality – under Thatcher certainly – and Howard’s turn away from the rhetoric is pretty meaningless. The underlying trend towards the reversal of a political culture which privileged a public interest over selfish private interests is still there – if not more starkly because now the nakedness of the appeal to greed is evident.

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